2014 (8) TMI 856 - AT - Service Tax

Extended period of limitation - bonafide belief - marketing agent service - Business Auxiliary Service - Held that - The order of the appellate authority is equally misconceived as there is no provision for an assessee to seek advisory opinion from departmental officers nor is any statutory provision brought to our notice which authorises departmental officers to provide advice on interpretation of provisions of the Act; assessment of transactional facts qua the provisions of the Finance Act, 1994 and provide guidance on taxability or otherwise. The perception of the learned appellate Commissioner that every departmental officer is a sui generis advance ruling authority is a misconception that has no legislative basis. Since the primary authority had clearly recorded the finding that the appellant was under bonafide misconception as to the liability to tax and had dropped penalty under Section 77 for that reason, that finding equally covers the case in favour of the assessee both with regard to imposition of penalty under Section 78 as well initiation of proceedings by invoking the extended period of limitation. Revenue has not preferred any appeal against the order of the primary authority against dropping of penalty under Section 77 of the Act. impugned order of learned appellate Commissioner is unsustainable and is quashed - Decided in favour of assessee.

Issues:

1. Appeal against rejection of appeal by Commissioner (Appeals) Jaipur.
2. Allegations of acting as a marketing agent for ICICI Bank Limited.
3. Initiation of proceedings beyond the period of one year.
4. Contradictions in primary and appellate orders.
5. Imposition of penalties under Sections 77 and 78.
6. Lack of provision for seeking advisory opinion from departmental officers.
7. Bonafide misconception regarding tax liability.
8. Sustainability of the appellate Commissioner's order.

Analysis:

1. The appeal was filed against the rejection of the appeal by the Commissioner (Appeals) Jaipur, concerning an adjudication order dated 23.02.2011 passed by the Assistant Commissioner, Central Excise, Sikar. The appellant was alleged to have acted as a marketing agent for loan products of ICICI Bank Limited, falling under Business Auxiliary Service as per Section 65(19) of the Finance Act, 1994.

2. The proceedings were initiated through a show cause notice dated 11.03.2010, beyond the one-year period, invoking the extended period of limitation. The appellant was accused of not depositing the service tax due within the stipulated time frame, leading to penalties under Sections 77 and 78 of the Act.

3. The primary and appellate orders were scrutinized, revealing contradictions and incoherences. The Assistant Commissioner dropped penalties under Section 77, citing the appellant's lack of awareness of the Act's provisions and a bonafide misconception regarding tax liability. However, the appellate authority imposed penalties under Section 78, alleging deliberate avoidance of tax payment.

4. The appellate authority's stance on seeking advisory opinions from departmental officers was deemed misconceived, as there is no provision for such consultations. The perception that departmental officers act as advance ruling authorities lacked legislative basis, challenging the validity of penalties imposed under Section 78.

5. Given the primary authority's finding of the appellant's bonafide misconception regarding tax liability and the dropping of penalties under Section 77, the appeal favored the assessee. The unsustainable nature of the appellate Commissioner's order led to its quashing, with the appeal allowed without costs.

This detailed analysis highlights the key legal issues, contradictions in orders, misconceptions regarding tax liability, and the lack of provision for seeking advisory opinions, culminating in the quashing of the appellate Commissioner's order.

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